Asset Management and Investement Management the same thing?
When reading online, some people differ AM from IM, but some also say that's the same. Can anyone here clarify it for me? I'm still doing my BBA and I don't really understand the big picture of the different sections/general diagram of finance.
Thanks!
Basically. Though investment management generally is a bit more discretionary and active-focused than asset management. Asset management has more of a fiduciary role.
So if I'm looking to one day work as a portfolio manager I should focus more on the IM? Am I right?
It's the same thing.
Some random WSO poster is bound to come on here and say "Akshuallly Asset Management is the OVERARCHING category and basically EVERY investment firm is an "asset manager".
Don't listen to them.
AM / IM firms are their own distinct category of firm completely separate to other investment firms like hedge funds, private capital funds and asset owners (this one particularly irks me as being placed under "AM" - they literally don't charge money for "managing" assets because they have FULL rights over the assets as principals).
Asset Managers are firms like T. Rowe Price, BlackRock, Fidelity etc essentially large firms with an extensive platform offering of different funds from passive to active funds, fund of funds, various asset classes and strategies all delivered to retail, private and institutional clients. These firms are typified by usually being long-only investors, charging only assets under management fees and employing a relatively large contingent of sales people to distribute out their fund products. These AM firms use either Asset Management or Investment Management to describe themselves but ultimately they mean the same thing.
Careers in AM firms span the distribution side, the investment side and the product development side. Investment careers at these firms are typically defined by the asset class you focus on or if you manage a passive portfolio or if you focus on thematics like ESG. So if you want a career in "AM" you have to be specific about which side of the business you mean (although most people on WSO rightfully assume investment roles) and either an asset class, passive investing or thematic investing.
Thank you for making things more clear for me! I saw that you are working in IB. Do you think working 2 years out of BBA in IB before doing an MBA can be beneficial for AM after it?
No.
Assuming you mean Investments within AM:
If you are set on being a portfolio manager - you should focus on what asset class and/or strategies you'd like to work on. At the very least, I would encourage you to look for research analyst roles - things like 'junior credit analyst' etc. You want to get as close to literally 'investing' assets as you can - often times, especially at the larger firms mentioned i.e. fidelity there are a lot of roles that sound like portfolio management - like a client portfolio manager for example. That's more of a client service role than it is a true portfolio manager, where you are managing the 'black rock core plus fixed income fund' or whatever. I'd note that this is very challenging to break into - what isn't nowadays - as if you are at a good performing manager, people don't really leave often and there just isn't that many roles. I would not, personally, bother with the IB route if you are set on it.
Broadly - I think the other poster laid it out for you. In most cases, you'll be looking at those big names... although I would tell you that there are a variety of firms, smaller more niche firms, that can provide good opportunities as well. Certainly in fixed income - I've never run across more random people, who work for a random firm managing billions of insurance money. It's a big, small world.
A comment on asset owners - i.e. pension funds, endowment funds, etc. - often times when you look at roles there, you are going to be doing a job that is more akin to manager research than direct investing. Let's say you are part of a fixed income team - you'll be looking at fixed income managers (i.e. double line, PIMCO, etc.) to allocate that specified portion of the fund to. Certainly at some of the largest asset owners they will have in-house teams that manage portions of the portfolio - but just something to be aware of as you look at different jobs. They are good experience - and candidly, I think they are an underrated way to get exposure to a broad variety of managers, asset classes, investments - to help you understand the lay of the land.
Another thing - note that there are a variety of firms who function as 'consultants' - wilshire, Aon Hewitt, Callan, Cambridge - these you often see working with the large asset owners. They will help said pension fund decide on it's allocation to, say, fixed income - and then will help them hire a 'manager' - i.e. doubleline, PIMCO, etc. whose strategy best fits whatever their market outlook is and the rest of the portfolio. I bring this up because it can get very confusing, very quickly, when you start to look at firms, roles, etc.
Does an MBA still relevant within your route you explained? Again, some people present MBA, top MBA, as a must and some people doesn't think the same for their career path. Just curious to hear you out about it.
It's as relevant as you make it. It's not a traditional requirement for a portfolio manager. In most cases - I'd tell you skip the MBA, and get something that's closer to the investment team. Trader, Quant, research analyst - those types of things to get you experience in making investment decisions at an institutional level. That is what matters.
MBA's in my view are great for re-branding yourself, switching careers/transitioning roles and/or bridging a skills gap. In limited cases - it's a get it or get out deal, you certainly get it. I've never been a fan, or understood, getting one straight out of school or unless you need the above.
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